Disney’s variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?

12) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point?

A. $25,600

B. 6,200 units

C. 2,133 units

D. 4,600 units

When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.

A. less than quantity supplied

B. equal to quantity supplied

C. double the quantity supplied

D. greater than quantity supplied

Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms' production levels as given. Then in equilibrium the output effect __________.

The balance of payment account is made up of:

A. an import account and an export account.

B. a monetary account and a fiscal account.

C. an investment account and a consumption account.

D. a current account and a financial and capital account.

The balance of payment account is made up of:

A. an import account and an export account.

B. a monetary account and a fiscal account.

C. an investment account and a consumption account.

D. a current account and a financial and capital account.

23) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.

A. supplied for the purpose of buying assets abroad

B. demanded for the purpose of importing foreign goods and services

C. demanded for the purpose of buying U.S. net exports of goods and services

D. supplied for the purpose of selling assets domestically

24) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.

A. the monetary policy reaction lag

B. the sacrifice ratio dilemma

C. the time inconsistency of policy

D. inflation targeting

25) Which of the following is not correct?

A. Deficits give people the opportunity to consume at the expense of their children, but they do not require them to do so.

B. In 2005, the U.S. government had a deficit.

C. The U.S. debt per-person is large compared with average lifetime income.

D. A potential cost of deficits is that they reduce national saving, thereby reducing growth of the capital stock and output growth.

26) President George W. Bush and congress cut taxes and raised government expenditures in 2003. Which of the following is not correct?

A. While there was subsequent improvement in economic performance, it’s not entirely clear that this was due to the policy.

B. In general it is easier to reverse monetary policy than to reverse fiscal policy.

C. In general monetary policy can be implemented faster than fiscal policy.

D. At the time the economy was just moving into a recession.

27) The Federal Open Market Committee __________.

A. is required to increase the money supply by a given growth rate each year

B. is required by its charter to change the money supply using a complex formula that concerns the tradeoff between inflation and unemployment

C. is required to keep the interest rate within a range set by Congress

D. operates with almost complete discretion over monetary policy

A. must be smaller than the price effect

B. must balance with the price effect

C. can be larger or smaller than the price effect

D. must dominate the price effect

The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:

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